In November, the United States issued a new National Security Strategy that has been widely criticized as an aggressive assertion of U.S. strategic interests in the Western Hemisphere.

Amidst the document’s laundry list of absurdities, which include asserting the U.S.’s right to control the Western Hemisphere, limiting foreign powers from partnerships and infrastructure-building in the region and reversing other countries’ policies that “disadvantage” U.S. companies, one issue flying under the radar could have significant ramifications for Canada: In a brief point on page 19, the NSS asserts that future agreements with nations “dependent” on the U.S., must require “sole-source contracts for (U.S.) companies.”

As one of these allegedly “dependent” nations, this sole-source requirement is a threat to Canada’s plans to build and procure homegrown solutions in

defence and digital infrastructure. Can Canada meaningfully increase its sovereignty if the U.S. is putting all its coercive might into privileging its own companies? In practice, sole-source contracts would lock us in with U.S. providers and substantially limit our freedom to operate and to make sovereign decisions about our infrastructure and security.

One of the first areas this could impact is Canada’s defence industrial policy, which has been a core priority of the Carney government.

Canada’s 2025 budget allocated $64 billion for defence spending, including $6.6 billion to develop our defence industrial base and $4.6 billion under the Defence Industrial Strategy (DIS).

The funding aims to help the country meet NATO’s two per cent GDP minimum next year and the five per cent goal by 2035. The strategy seeks to jumpstart rearmament while creating an economic flywheel through defence tech commercialization, dual-use tech and infrastructure development. While much of the funding is for procurement from foreign providers, including for submarines, significant investment is intended for Canadian firms.

The DIS seeks to retain more value in Canada, develop sovereign solutions and decrease dependence on the U.S. As such, it runs directly counter to the Americans’ interests as stated in the NSS, meaning the DIS could potentially be considered a threat to U.S. national security and industry.

A huge hurdle to ‘buy Canadian’ procurement in defence is that Canada currently lacks sufficient domestic capacity to meet government needs. That’s why so much effort is being put into supporting growing Canadian companies that are already competing with U.S. and international firms, which might offer quicker, cheaper, but less sovereign options. Trade pressure to “sole source” defence contracts from the U.S. could significantly undermine the DIS’s long-term efficacy.

Moreover, any policy to compel Canada’s procurement toward preferred U.S. vendors is a clear violation of sovereignty. The first place this might play out is in the ongoing debate about Canada’s future fighter jet capabilities, with the Carney government indicating it is deciding between U.S. F-35 and Swedish Gripen jets. While this is not a case where Canadian companies are in the running for the contract, and it is widely agreed that the F-35 is the superior fighter, the choice between serving Canadian needs and U.S. interoperability and industrial desires must remain Canada’s to make.

On the basis of digital infrastructure, Canada could certainly be classified as one of those countries that depend on the U.S. the most. A handful of American companies — Amazon.com Inc., Microsoft Corp. and Google LLC — dominate the cloud services market for example, with similar trends in ad tech,

AI and other digital markets. At the same time, the national security concerns associated with Canada’s dependence on the U.S. for digital infrastructure are starker than ever. Official U.S. channels for access to information threaten the security of Canadian data stored in the cloud or communicated across networks, and concentration raises concerns about the stability and resilience of critical infrastructure.

As Canada wakes up to these risks, digital sovereignty has become an urgent priority. The conversation has included calls for using government procurement as a strategic lever to support digital champions or, at least, to diversify away from the U.S. by procuring from trusted non-American allies. Increased pressure for sole-source contracts from the U.S. for digital services will only undermine these efforts by further cementing U.S. digital services as the default.

Additionally, the NSS’s reference to trade agreements raises a risk that the U.S. might seek to codify a sole-source contracting requirement within a renegotiated

CUSMA in the new year. Such a requirement would erode any chance Canada has of securing its digital sovereignty.

In a way, the NSS has simply articulated what many suspected the U.S. position for the upcoming CUSMA renegotiations will be, but we cannot ignore its blatant warning.

Protecting our autonomy and what little competition exists in government procurement must be a non-negotiable for Canada. It is imperative that the government unapologetically focuses on goals that boost sovereignty, such as becoming our own best customer for procurement — especially in strategically important sectors like defence and digital infrastructure.

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Matthew da Mota and Emily Osborne are policy researchers at the Canadian SHIELD Institute for Public Policy